An item or transaction will qualify for classification as a cash equivalent:
A) if it has a remaining term of more than three months but no more than six months
B) its term to maturity is no greater than twelve months
C) it has a fixed maturity date of greater than twelve months
D) only if it had a maturity of less than three months at the date of acquisition.

Question

Quizplus · Accepted Answer

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. They typically have a maturity of three months or less from the date of acquisition.

An Item or Transaction Will Qualify for Classification as a Cash